Over the next few days online and in the paper the Guardian will be looking at the human impact of recession, benefits reform and cuts to public services.

We are interested in how people are coping - or not coping - with the multiple challenges of dealing with the kinds of social and financial pressures not witnessed in this country for decades.

This is the backdrop: incomes are plunging, while food prices (up 30.5% in the last five years) and utilities bills are soaring. Many households at the lower end of the income scale have been pummeled by job insecurity, benefit cuts and rising housing costs. Many are hamstrung by debt.

We'll be looking very broadly at issues around work, housing, food, and health. We'll be hosting expert guests and featuring datablogs, reportage and commentary from Guardian journalists.

We want you to contribute too: tell us your views and stories.

Today, we are featuring in-work poverty: or how a low to middle income increasingly fails to keep up with the spiralling costs of living.

My colleague Amelia Hill has been investigating a group of people our research suggests are on the financial "cliff edge": families which are in employment but finding it increasingly hard to make ends meet, and who find themselves at high risk of being pitched into poverty.

Here's a taster of her news story:

Almost seven million working-age adults are living in extreme financial stress, one small push from penury, despite being in employment and largely independent of state support, according to the most comprehensive study of the finances of employed households, commissioned by the Guardian.

Unlike the "squeezed middle", these 3.6m British households have little or no savings, nor equity in their homes, and struggle at the end of each month to feed themselves and their children adequately. They say they are unable to cope on their current incomes and have no assets to fall back on, leaving them vulnerable to something as simple as an unexpectedly large fuel bill.

The findings challenge the argument made by the work and pensions secretary, Iain Duncan Smith, who last week said parents should get a job to ensure their children are not brought up in poverty.

"These figures are a mega-indictment on the mantra of both political parties, that work is the route out of poverty," said Frank Field, the Labour MP for Birkenhead and former welfare minister who is now the coalition's poverty csar.

"What's shocking about this is that these are people who want to work and are working but who, despite putting their faith in the politicians' mantra, find themselves in another cul de sac. Recent welfare cuts and policy changes make it difficult to advise these people where they should turn to get out of it: it really is genuinely shocking."

Throughout this afternoon we'll be publishing more on this story, including the Experian data behind the story, and three powerful case studies in which working families on the financial brink talk about their lives.

The three families are part of an ongoing project between the Guardian and Resolution Foundation. We'll be following the families' fortunes over the next 12 months. More on that later.

4.25pm: My colleague Simon Rogers has prepared some fascinating data on the rising costs of living in Breadline Britain, taking in food, housing, fuel, energy and transport.

Between March and April this year, he explains, we saw the following real terms rises:

• Transport: up by 1.2%. Petrol prices went up by 3.2 pence per litre on the month to reach a record £1.42 per litre. Diesel prices rose by 2.1 pence per litre to also reach a record level of around £1.48 per litre• Housing costs: prices rose by 0.9% between March and April.The ONS says the big increase was in rents - and for other services• Alcoholic beverages & tobacco: the increase in excise duties that came into force towards the end of March means prices rising by 2.9%, with tobacco up by 5.1%• Clothing & footwear: only went up by 0.2% between - but rose by 1.3% between the same two months a year ago.

4.39pm: So who are the 3.6m UK households most at risk of financial stress - and being pitched into poverty?

In my analysis piece I say:

They are proud to have a job and scorn welfare. They are grafters who are proud of doing the "right thing". They put their faith in the government's mantra that work pays. But "cliff-edge" households – perhaps as many as 3.6m in England alone – now find themselves teetering precariously on the brink of poverty.

The "cliff-edgers" work in retail, the service sector, and in seasonal businesses like tourism. They run small firms, often as self-employed tradespeople. Household income is typically between £12,000 and £35,000. The boom times gave many of them modest visions of betterment and security; the recession has engulfed them in financial stress.

I add:

Their lives have become testbeds of frugality and improvisation. Losing their job would be catastrophic. But even comparatively minor setbacks - a broken washing machine; a higher than expected gas bill – trigger a financial crisis.

There's little sense of victimhood or self-pity, however. There's a profound ethos of personal responsibility, a determination to juggle and graft in the face of hardship.

"Their whole ethos is about work; they don't want to end up on benefits or the dole," says Bruno Rost of Experian, the data company which carried out the detailed analysis of in-work poverty for the Guardian, including in-depth surveys of attitudes and behaviours, coupled with a wide range of quantitative data.

But there's also a stressful awareness of the seemingly ever-shrinking gap that separates them from the slide into poverty and homelessness. Unlike the "squeezed middle", group, which is more likely to have assets to act as a buffer against misfortune, the cliff-edge is hugely exposed.

Of course, this is a generalisation: but a broader point is that these households didn't expect to be on the cliff edge: they "played by the rules" (to quote the work and pensions secretary Iain Duncan Smith) and now many find that work at the lower end of the income spectrum isn't paying.

We see that the cliff edge is not, generally, a predominantly urban or metropolitan phenomenon. It is seaside towns, and rural areas (north Devon, Western Isles); the south west (Torbay, Cornwall); the outer suburbs of London (Hounslow, Harrow).

It shows that in 79 our of 406 areas, at least 20% of households are in danger of falling of the financial cliff edge.

These didn't make a huge amount of sense when trying to understand why some areas came out higher than others. i.e. the SE and SW of England have few large concentrations of South Asian communities, or traditional industrial, areas - yet came out badly?

What was the significance of these indicators, and why were these ones chosen?What other ones might have been chosen? (e.g. the distribution of free school meals as they overlap with housing benefit?)

The way this map complicated the old North/South divide was fascinating, and the results rang true in areas I know, but the choice of indicators was curious.

The answer, I think, is that some areas have different types of people at risk. The Mosaic system used by Experian sorts people into eight types who fall into the "at risk" category.

In Torbay, for example, there were three main "types":

• Often indebted families living in low rise estates• Mixed communities with many single people in the centres of small towns• Self employed trades people living in smaller communities

While for Hyndburn in Lancashire, for example, the dominant "at risk" types are:

On Tuesday Bruno Rost of Experian will be online between 1pm and 2pm to take your questions about the data.

6.17pm: We've just published Amelia Hill's longer read on people at risk of falling into poverty. One of the people she speaks to, Laura, is a single parent and civil servant with take home pay of £18,000.

There's some discussion below the line on whether households on the "cliff edge" are "really" in poverty, but Laura illustrates our thesis perfectly: they are not - yet. They are rather people at risk of poverty: people who live relatively frugally but find it increasingly difficult to make their income stretch to the end of the month.

People will no doubt double-take (I did): a civil servant on the breadline?

Laura says:

"It's like there's a conspiracy of silence: who would believe that a civil servant could be living below the breadline?" she asks. But Laura is doing exactly that. After her mortgage, utility bills and monthly shop are paid, every pound is tightly budgeted for: a Marks and Spencer curry is a occasional treat, a glass of wine an impossible luxury.

Her salary is rarely enough. "I'm not 'poor poor' – I can afford to feed my son and myself, but I usually run out of money a few days before the next pay cheque comes in," she says. "And I mean I literally run out: I often don't have a single penny to spend for three or four days."

Amelia goes on (you can read the full article here) to talk to the Charity for Civil Servants, a benevolent fund for civil servants who fall on hard times. Once, hardship funds like this catered mainly for the retired and vulnerable; but now the bulk (85%) of its grants go to beneficiaries in work, often with young families.

I'll come back to the curious re-emergence of hardship funds on Tuesday.

6.23pm: Alison Garnham, chief executive of the Child Poverty Action Group has emailed me to comment on our investigation into households at risk of poverty. She says:

"The Guardian's findings should remind us of just how important it is that we have a strong social security system for families. But with the Coalition pushing through £20 billion of cuts to welfare, our social security system will fail to keep families out of poverty. The IFS have warned that a further 400,000 children will be in poverty by 2015, but as the economic situation worsens this may well turn out to be an underestimate.

"Politicians often talk about people being poor because they've made the wrong choices in life. The truth is that six in ten poor children have a working parent - a child growing up in poverty is much more likely to have a parent who's a cleaner or a care worker than one who's an alcoholic, a drug addict or too lazy to work.

"Despite all the 'work first' talk from politicians, it has never been properly matched by a 'jobs first' approach to prioritise job creation programmes in both the public and private sector. There simply aren't enough jobs, or enough hours of work in the economy. High levels of unemployment and now being compounded by a growth in underemployment, with 1.4 million people classed as underemployed who cannot get the full hours of work they want.

"It's clear that the current approach is not working and time to ask again how it was that in 1946, with worse debt than we have now, our nation was still able to invest in creating the jobs and homes that were needed."

6.54pm: We've just published three detailed interview case studies which, in my view, really get to the heart of who is living on the cliff edge, and how they feel about it.

They are, in my humble opinion, incredibly powerful.

The first is with Paul and Emma Marshall, from Birmingham. Here's a quote from Paul:

Counting every penny is exhausting and frustrating. My lack of job security is frightening. And all the time, the bills just keep going up and up. There's nothing left to cut costs on. Emma had a can of soup for dinner last night. But at the end of the day, we still have our pride.

I feel ashamed that my children have had to live under the constant threat of poverty and have had to move home five times to avoid homelessness, but I work as hard as I can, and as many hours as possible, and I simply can't earn enough to move back from this cliff edge. I love my job and I think I'm paid a fair wage for it. But the cost of living makes every day a struggle.

Rents and food costs are spiralling up and it makes me so angry – how can society have got to a place where a woman with a decent job and a good salary struggles to live and feed her children with dignity? I know the price of sweetcorn and tins of tuna in every shop in my neighbourhood.

The third case study is of Nicola Probert and Tony Hodge from Bristol.

Nicola says:

It shouldn't be like this: we have both always worked and I feel really strongly that work should be rewarded. I don't want to rely on the state.

For me, the last quote is especially significant. These are the very "hard working families" to whom the Coalition - and Labour too - make their pitch: work hard, play the rules and you will be rewarded.

Will Nicola's bemusement that "It shouldn't be like this" turn to something more angry?

We'll be following the fortunes of these three families over the next 12 months in partnership with the Resolution Foundation.

We'll also be interested in their reflections on the causes, consequences and possible solutions to their predicament.

Politically speaking, that could generate some powerful questions, as families on the cliff-edge begin to digest politicians' rhetoric about hardworking families and ask themselves: "How did we get here?"

7.19pm: Ok, I'm signing off for tonight. It's been a short live blog session today, but it'll be a longer one tomorrow, when we'll be looking at more detail at life on the poverty cliff edge.

Well, we could try, and here's where you can help. If you are living on the cliff edge, tell us about your experiences, hopes and fears. Leave comments below the line or email me at: patrick.butler@theguardian.com

On Tuesday we'll look at some of the causes of working poverty, and some of the consequences, from the rise of Wonga to the boom in charity shops and food banks.

We'll be holding a live Q@A between 1pm and 2pm. Our guests will be Bruno Rost of Experian (which crunched the "risk of poverty" data) and James Plunkett, secretary to the Commission on Living Standards at the Resolution Foundation.

Later in the afternoon we'll be launching the second part of Breadline Britain: an investigation into the rising number of children arriving at school hungry.